Guide To Arbitration In The Kingdom Of Saudi Arabia (KSA)

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Overview of KSA Arbitration Law

1. In 2012, the Kingdom of Saudi Arabia ("KSA") enacted a new arbitration law in the form of KSA Royal Decree No. M/34 (2012) concerning the approval of the Law of Arbitration ("KSA Arbitration Law"). This is modelled on the UNCITRAL Model law which is widely recognised as arbitral best practice.
2. The KSA Arbitration Law applies to domestic and international arbitrations (provided those international arbitrations meet the requirements set out in Article 3 of the KSA Arbitration Law). Parties can also agree for the KSA Arbitration Law to apply in commercial arbitration proceedings in respect of which the KSA Arbitration Law would not ordinarily apply (for example, if the governing law of a contract is other than KSA). The parties are however required to agree this.
3. In order to constitute a valid and binding arbitration agreement, per Article 9 of the KSA Arbitration Agreement, it is required to be in writing, though such agreement can be made after a dispute has arisen. Article 11 of the KSA Arbitration Law requires that KSA Courts must decline to hear a dispute that has a valid arbitration clause (provided that this is raised prior to issuing a statement of defence).
4. The KSA Arbitration Law affords the parties autonomy to decide the procedural aspects of the dispute. By way of example, parties are free to agree:

• The governing law and seat of arbitration;
• The institutional rules;
• select the arbitrator(s) determining their dispute. Per Article 14, if the Tribunal consists of one arbitrator, he/she must hold either a university degree in Shari'a or Legal Sciences and if the Tribunal consist of three members, the Chair must fulfil this requirement. Tribunals also have the authority to decide on their own jurisdiction; and
• the language of the proceedings.

5. Whilst parties are free to choose which law governs the agreement and dispute, Article 38 of the KSA Arbitration Law states that, notwithstanding a choice of law other than that of KSA, any arbitration conducted pursuant to its terms must not contravene the provisions of Shari'a and public policy. For example, awards ordering payment of interest would likely be unenforceable as this is contrary to the tenets of Shari'a.
6. Similarly, Article 25 of the KSA Arbitration Law provides that the procedural rules governing the arbitration are to comply with Shari'a. For instance, witnesses are to take an oath before giving evidence even if this requirement is not mandatory under the institutional rules or the procedural laws of the chosen arbitral institution or seat.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.